Iraq's Neighbours Threatened By ISIS' Success

Middle East | Country Risk | Wed Jun 25, 2014

BMI View: Both Jordan and Saudi Arabia face increased security threatsfollowing the rapid deterioration of Iraq's political situation. Although we do not expect a direct military conflict between radical jihadist group ISIS and Iraq's neighbours, theongoing regional turmoilraises the likelihood of border instability and domestic terrorist attacks.

The rapid progress in Iraq of insurgents spearheaded by the radical jihadist group the Islamic State of Iraq and the Levant (ISIS) presents a substantial security threat to adjacent states, notably Saudi Arabia and Jordan. While we do not anticipate a direct military conflict between ISIS and Iraq's neighbours, the continuation of the fighting will disrupt regional trade and raises the likelihood of border instability and domestic terrorist attacks. Taking these risks into account, we have revised down our proprietary short-term political risk ratings to 72.5 out of 100 for Saudi Arabia and 58.8 for Jordan - compared to 75.0 and 60.4 previously.

Our baseline view is that the political crisis in Iraq will continue over the coming years, following the rapid takeover by ISIS and other Sunni militants of the country's west and north. While ISIS and its allies are highly unlikely to take over the heavily protected and largely Shi'a south, we believe that Baghdad will lack the means to retake the rest of the country anytime soon (see'Rising Risk Of State Collapse - Scenarios Assessed', June 23). Sunni tribesmen aligned with ISIS allegedly took control on June 23 of the only legal border crossing between Iraq and Jordan - a development that, if confirmed, would leave the Iraqi army with no operational presence along the country's entire western frontier. Two key crossings between Iraq and Syria have also been captured, allowing ISIS to easily move their forces and equipment across the two countries.

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